Questions: a. Is the acquisition of Arya Company constitute a business? Justify your answer b. Is the acquisition of Bron Company constitute a business? Justify your answer
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On January 1, 20X2, Sansa Company purchases two (2) separate sets of assets and activities from thirdparties, as follows:
i. A manufacturing plant of Arya Company. The set of assets acquired and liabilities assumed are as follows:
Plant premise P100,000,000
Machinery 60,000,000
Equipment 30,000,000
A mortgage loan secured on the plant premise 120,0000
Sansa will continue to employ the existing employees of the manufacturing plant and will pay them the
same salaries as before. The above manufacturing plant is a cash-generating unit that generates
outputs that are sold to outside customers. Sansa pays a cash consideration of P100 million to Arya
Company.
ii. A set of assets and liabilities of Bron Company.
Plant premise P100,000,000
Machinery 60,000,000
Equipment 30,000,000
A mortgage loan secured on the plant premise 120,0000
The vendor will retrench the existing employees of the factory and pay their termination benefits. The set
of assets is not capable of generating independent
use this set of assets to obtain economies of scale with its existing facilities. It pays a consideration of
P55 million to the vendor.
Questions:
a. Is the acquisition of Arya Company constitute a business? Justify your answer
b. Is the acquisition of Bron Company constitute a business? Justify your answer
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- On January 1, 20X2, Sansa Company purchases two (2) separate sets of assets and activities from thirdparties, as follows:i. A manufacturing plant of Arya Company. The set of assets acquired and liabilities assumed are as follows:Plant premise P100,000,000Machinery 60,000,000Equipment 30,000,000A mortgage loan secured on the plant premise 120,0000Sansa will continue to employ the existing employees of the manufacturing plant and will pay them thesame salaries as before. The above manufacturing plant is a cash-generating unit that generatesoutputs that are sold to outside customers. Sansa pays a cash consideration of P100 million to AryaCompany.ii. A set of assets and liabilities of Bron Company.Plant premise P100,000,000Machinery 60,000,000Equipment 30,000,000A mortgage loan secured on the plant premise 120,0000The vendor will retrench the existing employees of the factory and pay their termination benefits. The setof assets is not capable of generating independent cash flows. However,…On January 1, 20X2, Sansa Company purchases two (2) separate sets of assets and activities from third-parties, as follows:i. A manufacturing plant of Arya Company. The set of assets acquired and liabilities assumed are as follows:Plant premise P100,000,000Machinery 60,000,000Equipment 30,000,000A mortgage loan secured on the plant premise 120,0000Sansa will continue to employ the existing employees of the manufacturing plant and will pay them the same salaries as before. The above manufacturing plant is a cash-generating unit that generates outputs that are sold to outside customers. Sansa pays a cash consideration of P100 million to Arya Company.ii. A set of assets and liabilities of Bron Company.Plant premise P100,000,000Machinery 60,000,000Equipment 30,000,000A mortgage loan secured on the plant premise 120,0000The vendor will retrench the existing employees of the factory and pay their termination benefits. The set of assets is not capable of generating independent cash flows.…Heartland Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Heartland Telecom purchased goodwill as part of the acquisition of Samson Wireless Enterprises, which had the following figures: Data table: Book value of assets $800,000 Market value of assets 900,000 Market value of liabilities 510,000 Requirements: 1. Journalize the entry to record Heartland Telecom's purchase of SamsonSamson Wireless for $400,000cash plus a $600,000 note payable. 2. What special asset does Heartland Telecom'sHeartland Telecom's acquisition of SamsonSamson Wirelessidentify? How should HeartlandHeartland Telecom account for this asset after acquiring SamsonSamson Wireless? Explain in detail.
- . The following information pertains to Best Food (BF) Company’s intangible assets: a. On January 1, 2020, BF signed an agreement to operate as a franchisee of Macky’s Food Chain for an initial franchise fee of P1,500,000. Of this amount, P300,000 was paid when the agreement was signed and the balance is payable in 4 annual payments of P300,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020 of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is P874,000. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. BF’s revenue from the franchise for 2020was P19 million. BF estimates the useful life of the franchise to be 10 years. b. BF incurred P1,300,000 of experimental and developmental costs in its laboratory to develop a patent which was granted on January 2,…On 1 July 2021 Collaroy Ltd acquired the following assets and liabilities from Bilgola Ltd Carrying amount Fair value Land $500,000 550,000 Plant ( cost $400,000) 480,000 460,000 Inventory 65,000 63,800 Cash 15,000 15,000 Accounts Receivable 40,000 38,600 Accounts Payable (20,000) (20,000) Loans (110,000) (110,000) In exchange for these assets and liabilities Collaroy issued 160,000 shares at $1.70 per share . At 1 July 2021 these shares had a fair value at $7.35 per share Required Prepare the journal entry for the aboveInformation concerning Tully Corporation's intangible assets is asfollows:a. On January 1, 2019, Tully signed an agreement to operate as afranchisee of Rapid Copy Service Inc. for an initial franchise fee of$85,000. Of this amount, $25,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000each beginning January 1, 2020. The agreement provides that thedown payment is not refundable and no future services arerequired of the franchisor. The present value at January 2, 2019, ofthe 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5%of the revenue from the franchise must be paid to the franchisorannually. Tully's revenue from the franchise for 2019 was $900,000.Tully estimates the useful life of the franchise to be 10 years. b. Tully incurred $78,000 of experimental and development costs inits laboratory to develop a patent, which was granted on January 2, 2019. Legal…
- Carla Vista Electric Inc. has the following amounts included in its general ledger at December 31, 2023: Organization costs $34,600 Purchased trademarks 18,400 Development phase activities (meet all six development phase criteria) 30,300 Deposits with advertising agency for ads to promote goodwill of company 8,500 Excess of cost over fair value of identifiable net assets of acquired subsidiary 80,600 Cost of equipment acquired for research and development projects; the equipment has an alternative future use 125,600 Costs of researching a secret formula for a product that is expected to be marketed for at least 20 years 75,000 Payment for a favourable lease; lease term of 10 years 14,400 (a) Based on the information provided, calculate the total amount for Carla Vista to report as intangible assets on its statement of financial position at December 31, 2023. Assume Carla Vista uses IFRS to prepare its financial statements.Information concerning Blue Corporation’s intangible assets is as follows. 1. On January 1, 2020, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $57,500. Of this amount, $11,500 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $11,500 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable, and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 10% (the implicit rate for a loan of this type) is $36,450. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blue’s revenue from the franchise for 2020 was $840,000. Blue estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.)…Information concerning Sandro Corporation's intangible assets is as follows. 1. On January 1, 2020, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sandro's revenue from the franchise for 2020 was $900,000. Sandro estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) 2.…
- Berrie Electric Inc. has the following amounts included in its general ledger at December 31, 2020: Organization costs $34,000 Purchased trademarks 17,500 Development phase activities (meet all six development phase criteria) 29,000 Deposits with advertising agency for ads to promote goodwill of company 8,000 Excess of cost over fair value of identifiable net assets of acquired subsidiary 81,000 Cost of equipment acquired for research and development projects; the equipment has an alternative future use 125,000 Cost of researching a secret formula for a product that is expected to be marketed for at least 20 years 75,000 Payment for a favourable lease; lease term of 10 years 15,000 Instructions:a) Based on the information provided, calculate the total amount for Berrie to report as intangible assets on its statement of financial position at December 31, 2020. Assume Berrie uses IFRS to prepare its financial statements.…Prepare a schedule showing all expenses resulting from the transactions that would appear on Concord's income statement for the year ended December 31, 2025. CONCORD CORPORATION Expenses Resulting from Selected Intangible Assets Transactions $On Jan. 1, 2022, ABC Co. sold a machinery to XYZ Co. for P1,900,000. Because of the entity's commitments to its customers to provide their needs for the next 4 years, ABC simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows:FV of machinery, P2,200,000CA of machinery, P1,700,000Remaining useful life of machinery, 6 yearsLease term, 4 yearsAnnual rent payable at the end of each year, P500,000Market rate of interest, 10%PVF, ordinary annuity, 10%, 4 periods, 3.1699PVF, ordinary annuity, 10%, 6 periods, 4.3553PVF, single payment, 10%, 4 periods, 0.6830PVF, single payment, 10%, 6 periods, 0.5645What amount of lease liability should ABC record on Jan. 1, 2022?